Advisers need to reinvent how they deal with aging clients, says longevity expert

The pace at which Americans are hurtling into retirement age and societal shifts in consumer expectations, in countless areas of their lives, are upending how financial advisers think about retirement planning for clients.

“Your profession is at a new frontier to create an entirely new business around longevity planning,” said Joseph Coughlin, founder and director of the Massachusetts Institute of Technology AgeLab. “We are done with retirement — the word, the idea, the products, the conversations were really good, for my father. But not for the next generation.”

[More: As U.S. billionaires live longer, more wealth managers roll out estate planning]

Not only is the U.S. cohort of seniors growing larger by the day, with one American turning 73 every seven seconds, but worldwide the group will control an ever-larger share of global assets, according to Mr. Coughlin. By 2020, individuals over the age of 60 worldwide will control about 30% of global spending — or $8 trillion, he said.

The traditional idea that clients will retire at age 65, as if it’s like “a Newtonian law of physics,” is bogus, said Mr. Coughlin.

“The client has profoundly changed,” said Mr. Coughlin, who spoke Tuesday at InvestmentNews’ annual Retirement Income Summit in Chicago.

[More: Why the 4% rule may be irrelevant]

Economics and technology can be disruptive forces for advisers, but “the real profound change in the business won’t be economics or technology alone; it will be the consumer, the expectations,” said Mr. Coughlin, who suggested that the industry is unprepared and unresponsive to this idea.

[More: One retirement risk few people talk about]

One new concept for financial advisers: Build a longevity-planning team that handles the issues of a client relationship around aging, such as transportation, housing, aging in place and career management, Mr. Coughlin said. This would be in addition to a traditional financial planning team that handles investing, tax planning, charitable giving, banking, insurance and accounting work, for example.

Mr. Coughlin outlined four different opportunities within this new type of client relationship to have longer, deeper conversations with older clients: managing ambiguity (e.g., do clients plan to go back to school, volunteer or start a business?); managing big decisions (e.g., should clients downsize or stay in their current home, quit their job or move?); managing complexity (e.g., managing multiple medications, caring for partners); and managing end-of-life decisions.

Serving as a retirement coach and curator, Mr. Coughlin said, is “value that no algorithm will ever beat you on.”